FAQ - PRIVATE
CAR INSURANCE...!
From Tvsinsurance.in
1. What are the
insurance policies available for the private car?
There are two types of
policies – Third party insurance and Comprehensive Insurance Policy
Third party insurance
policy covers legal liability of the insured towards death, injury to persons
and damage to property of the third party. This cover is a must and minimum as
per the Motor Vehicles Act for using any car in a public place.
This is also
known as ‘Act only’ Insurance or Liability only cover.
Comprehensive policy
covers damage to the insured vehicle in addition to the third party insurance.
2. What is IDV of the
vehicle?
IDV is the Insured
Declared Value of the vehicle. It is the sum insured fixed at the commencement
date of the policy and normally filled by the proposer in the proposal form. It
is the amount which the insurer will pay at the time of claim, if the vehicle
is lost or stolen or damaged beyond repair.
IDV reflects the market
value of the car and is arrived on the basis of the listed selling price of the
manufacturer and adjusted as per the standard depreciation rates. It is to be
noted IDV is calculated only for the Comprehensive Insurance and not for Third
Party Insurance cover. IDV will decrease with the increase in the age of the
vehicle
3. What is No Claim
Bonus(NCB)?
Insurance company gives
discount on the Own Damage section premium for a claim free year to incentivise
accident free driving. This is called No Claim Bonus. The discount starts at
20% and is cumulative. The discount increases with every claim free year. The
maximum NCB is 50% and results in substantial saving on Own Damage premium.
NCB can be availed when
policy is renewed before the expiry date. The benefit can be also availed if
the policy is renewed before 90 days from the date of expiry. Afterwards, NCB
can not claimed.
4. If new car insurance
is to be bought online, what information do I need to fill and what documents
are to be submitted?
Normally, the car dealer
will arrange for the insurance for new car. Insurance is mandatory for vehicle
registration under Motor Vehicles Act. Even the dealer offers choice of
insurers.
Due to some reasons, if
the insurance is to be purchased online, the information of the new car like
Engine capacity like Engine Number and Chasis Number is required. In addition,
the details like CC, make, model and manufacturing year of the car, purchasers
address, value of the vehicle etc have to be filled up.
However, it is recommend
to keep details of the previous expired insurance policy (if NCB is to be
claimed) and Registration Certificate of the car ready, to buy online insurance
or renew the policy.
5. What is a cover note?
It is a temporary
document that acts as a proof of insurance of the vehicle. It is valid for 60
days and is replaced by the policy document.
Earlier, the car dealer or the
insurance official used to issue cover note as policy cannot be issued
immediately. Nowadays, cover note is rarely used.
6. How is the premium of
new car insurance determined?
The premium for your car
insurance is calculated on different factors for the Own Damage cover
(Comprehensive cover) and the Third party cover.
Engine CC – Engine Cubic
capacity of the car is one of the factor for rating of Own damage and Third
party insurance premium.
The IDV (Insured
Declared Value) of the car (the value of your car that will be compensated in
case of theft or total damage)
Manufacturing Year –
This is to decide whether comprehensive cover can be given or not. Many
insurance companies do not give own damage cover for vehicles more than 7 years
old.
Your geographical
location – According to India Motor Tariff, India is divided into 2 zones.
Zone A – It includes
cities like Ahmadabad, Mumbai, Delhi, Kolkata, and Chennai
Zone B – The rest of the
country. The premium varies for each zone and more for Zone A.
The applicable No Claim
Bonus, accumulated over claim free years
Any add-on benefits
opted like Personal Accident cover etc.
7. What are the
additional covers (Add-on covers) available with the car insurance policy?
Add-on covers provide
additional protection or extra benefits / less deduction when a claim is preferred.
Extra premium is to be paid and they are optional.
Zero Depreciation cover
is an absolute must have for all new or relatively new cars. This is also known
as Bumper-to-Bumper cover or Nil Depreciation cover. It does not take into
account depreciation on car parts to be replaced in a claim.
Electrical or non
electrical extra – This cover is for the insurance of extra items fitted in the
car. This is part of own damage section of comprehensive policy.
Personal Accident
insurance – The PA insurance is available for Insured while driving the car,
passengers travelling and paid driver.
The other add-on covers
are the Invoice Cover and Roadside Assistance cover.
8. What are the
discounts that can be availed in taking car insurance?
The main discount is the
No Claim Bonus (NCB) which is explained earlier. This forms a main benefit in
saving the premium.
Membership discount –
Discount is given if the insured is the member of recognised Automobile
Association of their respective region. For example, for Chennai, the
membership is to be with Automobile Association of Southern India.
Loyalty Discount – some
insurers give discount for insured for their continuous renewal.
Occupational Discount –
some insurers give discount for professionals as they are deemed as safe
drivers.
Installation of
anti-theft and safety devices – Discount is given as this improves the risk
against theft.
Voluntary Higher
Deductible – Car insurance are subject to an excess, over and above only a
claim can be preferred. If the proposer is willing to bear additional amount in
a claim, then voluntary deductible discount is given.
The new car owner should
avail Nil depreciation add-on cover to avoid unnecessary high repair payment
due to depreciation in case of a claim.
9. Can a Claim for minor
damages be made under the private car insurance policy?
Minor damages normally
require small amount to be spent on repair and replacements. It is difficult to
decide which a minor damage is. The fact is when a claim is made; the benefit
of no claim bonus (NCB) is lost.
The accumulated NCB is lost, if even a single
claim is made, how so small the damage should be.
Hence, the comparison of
claims amount should be with the NCB amount being affected.
If the expenses for
damage repairs are way too high, then it is better to make a claim and lose the
NCB discount.
10. Why the sum insured
in private car insurance policy is less than the ex-showroom or the price paid
for the car?
The value of the car
decreases once the vehicle is taken out of the showroom. The less value is due
to notional loss of market value, as the vehicle is already registered.
The
depreciation is the main factor to determine the IDV (Insured Declared Value).
The rate of depreciation applicable for age of vehicle upto 6 months is 5%.
Hence, the new car value is less by 5%.
Moreover, the price paid
includes registration charges, insurance and service charges, which are
exclusive of showroom price.
11. How to cancel a new
car insurance policy?
It is necessary to know
the reasons for the intention to cancel the policy. Driving on the road without
an insurance policy is against Motor Vehicles Act and attracts fine and
penalty. It is mandatory to have third party insurance policy. On sale of car,
normally Car insurance policy is transferred to the buyer.
So, if a comprehensive
policy is not required, at least third party insurance policy is a must.
12. Can the vehicle
insurance policy be taken for the second hand car, if the car is in the
seller’s name?
The insurance can be
availed by submitting the sale letter from the seller (Form 29 & Form 30)
and previous insurance policy details.
13. What happens to the
car insurance covers when the car is sold?
There are two options.
Buyer can get the policy
transferred in his name by informing the insurance company in writing. The
insurance company will confirm the name change by an endorsement.
The seller can cancel
the policy and get refund of premium for the remaining period of the policy
provided there is no claim. The buyer will buy a fresh policy.
The insurance
company will cancel the policy only on submission of necessary documents for
ownership transfer and also a copy of the new policy for the vehicle. The NCB will
remain with the seller and can be availed if the new vehicle is bought.
14. If CNG or LPG kit is
fitted in the vehicle, whether the same is to be informed to insurance company?
CNG or LPG kit is
insured separately. Hence the same is to be declared while taking the policy.
If these are fit during the currency of the policy, this changes the fuel type
and risk nature.
Hence, the insurance company is to be informed with the
updated registration certificate to get endorsement for inclusion of the kit.
15. What is not covered
under Car insurance?
The Private car
insurance policy does not cover:-
Wear and tear of the car
and the parts
Loss or damage or
liability when the driver is without valid licence
Loss or damage or
liability when the driver is under the influence of drugs or alcohol etc.
Loss or damage to engine
due to oil leakage
Loss or damage or
liability when the policy is not in force
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